A positive start to global trading was promptly dampened this morning by a trio of dire economic data points. Home prices effectively double-dipped today, reaching a new low for the housing recession. Consumer confidence collapsed thanks to expensive gasoline prices that plagued the month of May. Chicago area business expansion, or the manufacturing base of the nation, dropped sharply. The Dow is still up about a half of a point, but there are three solid hours of trading time for that to change.
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Market News - Data Disaster Strikes
The Conference Board’s measure of consumer confidence dropped precipitously at the end of May, acting as the final, yet most sure nail, in hammering down earlier enthusiastic stock trading. The metric of the consumer mood had stagnated after showing months ago that the recovery would not be a smooth one. However, over the past several months, the index had inched ahead. This latest measure marked a 5.2 point collapse, and really raises significant concerns about how deeply high gasoline prices have impacted consumer spending. At 60.8, the monthly mark missed by far the economists’ consensus set at 66.5, as tallied by Bloomberg. The index represents a disappointing state of affairs, and one worse than an already concerning state in April.
The S&P Case Shiller Home Price Index for March marked a new recession level low, effectively recording a double-dip in housing prices. For the first quarter, housing prices fell 5.1% against the prior year, taking prices back to their mid-2002 levels. 12 of 20 Metropolitan Statistical Areas (MSA) hit new lows, and 18 were down from February.
The Chicago Purchasing Managers Index (PMI), reported today for the month of May, showed the pace of business expansion slowed in the Midwest this month. The Business Barometer Index fell to a mark of 56.6, from 67.6 in April. While a reading above 50 still marks economic expansion, the rapid drop in pace reinforces our concerns about economic slippage and downturn.
State Street’s (NYSE: STT) Investor Confidence Index gained in May. Amid many varied economic concerns, somehow global investor confidence still managed to improve this last month. Global confidence improved 6.8 points to an index reading of 104.1. The U.S. market was no drag either, as confidence in North American markets increased 7.7 points to 106.3. Even Europe gained 5.2 points to 79, though that absolute level of confidence illustrates recent months of decline.
Greece Uncertainty Cleared
Global markets got a boost this morning thanks to European official commentary regarding the possibility of its issuing additional aid to Greece. The euro gained on the news and markets across the board rose, including U.S. stocks ahead of the later reported poor economic data here at home.
Debt Limit Vote Today
A vote today to raise the debt limit is expected to fail, as it will include no cost cuts. The move to vote on the “clean” bill is a Republican political effort to paint the Democrats in a bad light. Tomorrow, the President meets with the entire GOP representation of the House.
Commodities and Currency
Oil is gaining today on a weakening relative dollar, which is weighed on by the debt dilemma in the States and the day’s European confidence building. WTI Crude Futures are up 1.75% to $102.35. Gold is about flat, while Wheat Futures are down about 3.8% in Chicago. The euro has gained 0.6% on the dollar, to $1.4374.
Nokia (NYSE: NOK) issued an earnings warning and its shares are down 15% as a result through midday. Nokia cited intense competition and tough pricing.
Wal-Mart (NYSE: WMT) had its South African acquisition of Massmart approved subject to certain conditions, though no further information was given. Wal-Mart was also in the news because it filled two open top executive spots in China after being hit by surprise resignations earlier this month.
The Corporate earnings wire includes news from E-House (China) Holdings (NYSE: EJ), Lions Gate Entertainment (NYSE: LGF), Phillips Van Heusen (NYSE: PVH), China Real Estate Information (Nasdaq: CRIC), Eltek (Nasdaq: ELTK), Lentuo International (NYSE: LAS), Qiao Xing Universal Resources (Nasdaq: XING). Holding meetings or calls, look for reports from France Telecom (NYSE: FTE), Nalco Holding (NYSE: NLC), Terex (NYSE: TEX), and Toreador Resources (Nasdaq: TRGL). Splitting shares today 2:1 Enbridge (NYSE: ENB), United Stationers (Nasdaq: USTR) and Lincoln Electric (Nasdaq: LECO); 3:2 Steve Madden (Nasdaq: SHOO).
Most Active Stocks
Biggest Gainers: Yongye International (Nasdaq: YONG), Agilysys (Nasdaq: AGYS), Central Vermont Public Service (NYSE: CV), Eltek (Nasdaq: ELTK), FuelCell Energy (Nasdaq: FCEL), First BanCorp Preferred (NYSE: FBP-PB), Sequans Communications (Nasdaq: SQNS), Zion Oil & Gas (Nasdaq: ZNWAZ), Rurban Financial (Nasdaq: RBNF), FiberTower (Nasdaq: FTWR), Meru Networks (Nasdaq: MERU), SmartHeat (Nasdaq: HEAT), Bank of Virginia (Nasdaq: BOVA), Funtalk China (Nasdaq: FTLK), Innotrac (Nasdaq: INOC), Accelr8 Technology (AMEX: AXK), Cagle’s (AMEX: CGL-A), Neurocrine Biosciences (Nasdaq: NBIX), Kimber Resources (AMEX: KBX), Ashland (NYSE: ASH).
Biggest Losers: American Realty Investors (NYSE: ARL), Valley National Bancorp (Nasdaq: VLYWW), Tibet Pharmaceuticals (Nasdaq: TBET), Transition Therapeutics (Nasdaq: TTHI), RIT Technologies (Nasdaq: RITT), Nokia (NYSE: NOK), Cleveland BioLabs (Nasdaq: CBLI), Dehaier Medical Systems (Nasdaq: DHRM), RealD Inc. (NYSE: RLD), Oak Ridge Financial (Nasdaq: BKOR), Magellan Petroleum (Nasdaq: MPET), China Biologic Products (Nasdaq: CBPO), Central Federal (Nasdaq: CFBK), UR Energy (AMEX: URG), China Education Alliance (NYSE: CEU), Lentuo Int’l (NYSE: LAS), First Capital Bancorp (Nasdaq: FCVA), YM BioSciences (AMEX: YMI), Ecotality (Nasdaq: ECTY), First Community Corp. (Nasdaq: FCCO), Uranerz (AMEX: URZ), Uranium Energy (AMEX: UEC), Orsus Xelent (AMEX: ORS), and Uranium Resources (Nasdaq: URRE).
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